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A New Paradigm: Protecting Market Share?

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OPEC in a Shale Oil World

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Abstract

Since its inception in 1960, OPEC has made two important decisions. The first decision was in October 1973 when it took over the pricing of its crude from international oil companies. The second decision is the one its ministers reached in their 166th ordinary meeting on November 27, 2014. By refusing to cut output and instead keeping the production ceiling intact at 30 million barrels a day, at a time when oil prices lost close to $40, the organization’s ministers signaled that they are seeking a new policy that does not focus on defending oil prices. The decision, in effect, created a new paradigm shift for the oil market as it marked the end of the residual or “swing” producer role for OPEC, a responsibility it assumed since the early 1980s to defend prices. OPEC, or at least its largest members, is now focusing on defending its share in the market. In June 2015, OPEC members, this time without dissent, agreed to continue with the Saudi-led policy of no production cuts and defend market share (Smith et al. 2015).

We can’t solve problems by using the same kind of thinking we used when we created them.

Albert Einstein

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Authors and Affiliations

  1. Department of Finance and Economics Visiting Associate Professor, King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia

    Mohamed Ramady

  2. Regus, Building 12, Level 4 Trust Tower, OPEC & Middle East Energy Correspondent Bloomberg News, Manama, Bahrain

    Wael Mahdi

Authors
  1. Mohamed Ramady
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  2. Wael Mahdi
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Ramady, M., Mahdi, W. (2015). A New Paradigm: Protecting Market Share?. In: OPEC in a Shale Oil World. Springer, Cham. https://doi.org/10.1007/978-3-319-22371-1_1

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